During my days as an MBA student at UT Austin, we learned that the primary goal for business was “shareholder wealth maximization.”
Now the Business Roundtable has redefined the purpose of a corporation to promote “an economy that serves all Americans.”
quite a change - can business do good and also do well?
Making Money Moral
Spectrum of investing from traditional to philanthropy. Impact investments focus on social and economic needs, sometimes trading off financial rewards to address a need.
Southwest Angel Network - Impact investing
A few years ago I joined the Southwest Angel Network, based in Austin. Members review proposals from start-up companies and decide whether to invest. We see 100+ companies a year, a wide variety of industries and issues. Interesting to learn about the innovative ways companies try to solve social problems such as increasing energy efficiency and improving health care.
“The angels at the SWAN Impact Network are bound together by a passion for making the world a better place by supporting dynamic startups that are striving to address serious challenges that our society faces. SWAN focuses on companies that expect to deliver measurable social or environmental impact, and who also have solid plans for financial success.”
Impact investing is now a hot area as business becomes more socially aware. Companies will be judged on “ESG” = Environmental, Social, and Governance actors when we consider risks and opportunities. The UN has developed 17 goals for sustainable development, such as no poverty and reduced inequality. And the Global Impact Investing Network lists very specific metrics for companies and investors to use when measuring impact.
Other related groups include SOCAP and Social Venture Partners. And watch Wharton B Lab
univesity partnerships
A tip of the hat to UT Dallas. It has taken 30+ years, but the university has now built a critical mass of entrepreneurial resources. Their Institute for Innovation and Entrepreneurship includes academic programs, incubators, and events. Plus a Blackstone Launchpad and collaboration with US Southwestern.
From my experience at Penn State and then later at UT Dallas, some universities can be difficult to work with, but they seem to be making an effort to streamline connections. Probably will be a source for some SWAN companies.
angel capital association
“Angels” are individuals who invest their own money in start-up companies, often in what is called a “seed round.” A group of angels typically invest $250K to $500K in a new company with the hope of achieving a profitable exit in 3 to 5 years. The professional organization of angel groups is the Angel Capital Association.
Research tends to show that angels investing in at least 10 companies have a greater than 80% chance of breaking even and almost a 1/3 chance of sizable returns. In my experience, out of 10 companies, half will totally fail, go to zero. A few will breakeven and maybe 1 will be a winner. There are no guarantees.
I think you get involved to learn about innovative companies, meet interesting people, and, for impact investors, hopefully improve the world a little bit. If you are lucky, you make some money as well.